Legally binding phase-out law for coal

Extract from BUND’s 2014 proposed plan to phase out all coal power stations in Germany by 2030.

The German Federal Government’s plans for energy transition and climate protection aim to reduce greenhouse gas emissions by up to 90 per cent by the year 2050. To achieve this goal, electricity generation will have to be completely free from CO₂ emissions, in other words there must be a complete shift to renewables. In the medium term this will require phasing out fossil-based electricity production in Germany. To reach these important milestones in climate protection, conventional power generation capacity will have to be fundamentally restructured and adapted to meet energy transition needs. The dominance of high-emission brown coal (lignite) and anthracite capacity must be cut back and power stations must become more flexible and efficient to reduce emissions. However, the current trend is in exactly the opposite direction.

A combination of low prices for CO₂ and coal, and the high price of natural gas, has led to a shift in electricity generation from gas to coal since 2010. Because exports of electricity have risen markedly since 2012, “cheap coal-fired electricity” is not just out-pricing natural gas power stations in Germany but also in neighbouring countries, such as the Netherlands. In 2013, the growth in electricity generation from coal again contributed to rising national greenhouse gas emissions (+1.2 per cent) compared with the previous year. Specific CO₂ emissions from electricity generation also rose to 559 g/kWh in 2013.

Lignite, an energy source that produces the highest climate-warming carbon dioxide emissions per unit of energy produced, is benefiting most from current market conditions. In fact, in the “record year” of 2013, the largest point sources of carbon dioxide emissions – lignite power stations – generated as much electricity as they did 20 years ago, a full 161 terawatt hours. The resulting emissions of just under 170 million tonnes of CO₂ accounted for half of all climate-harming emissions from electricity generation. The nine largest lignite power stations alone account for almost 20 per cent of all carbon dioxide emissions in Germany. Electricity generation from lignite remains at a high level – around five percent higher than the average for the last ten years.

Neither the price of CO₂ nor production costs for electricity from lignite gives a fair picture of all of the external costs to the climate, environment and health that arise from lignite-fired generation. Lignite is still by far the “most economically attractive choice” of fossil-based electricity generation on the market, while having the greatest impact on the climate and environment. Electricity generation from anthracite-fired plants fluctuates widely, but has remained at a high level since 2010. In contrast, generation from natural gas power plants has fallen dramatically, almost halving since the start of this decade.

The growing share of coal in the fossil fuel mix poses a threat to the national climate targets, not just up to 2020 but long beyond. Germany is far from achieving its targets for climate protection. Since 1990 it has so far only achieved a reduction of 23.8 per cent, having achieved cuts of 25.6 percent by 2011. The Federal Government admits that if it continues along this path it will miss the critical interim target, to reduce greenhouse gas emissions by 40 per cent from 1990 levels by 2020.

The key to phasing out excess fossil capacity is to remove the most harmful and least efficient plants from the market first. It is important to start with the oldest lignite power stations, since they produce the highest specific emissions of carbon dioxide. These plants are operated mainly to meet base load (rather than residual load) and there is little incentive to take them out of production. Climate-harming lock-ins to specific technology must be avoided, and lignite plants in particular should not produce electricity for longer than necessary. There is also a special need for political action, since lignite extraction involves major disruption to groundwater systems, the uprooting of thousands of people, massive disturbance to nature, damage to land and emissions of dust and heavy metals. Long-term power generation must be adapted to meet climate protection needs and the energy system must be restructured within a considerably shorter timeframe than the technical life of lignite power stations. Measures should therefore focus on reducing operating times for lignite power generation.

BUND proposes a legal framework for phasing out excess capacity in fossil energy generation that will benefit the climate. In the next phase of market reorganisation it is proposed that decommissioning a large proportion of old lignite plants should be a high priority. Legislation should be put in place to set an operating lifetime of 35 years for lignite plants that were brought on line before 1985 and have a net output of over 100 MW.

This measure would mean that between 2016 and 2020, a total of 24 lignite plants that were commissioned between 1965 and 1985 and have a combined net capacity of around 10 GW will be shut down. These plants, which have a generation efficiency of 34 to 37 per cent and an average self-consumption of 7.5 per cent, are among the most inefficient plants in Germany. By 2020 this would mean that just under half the net installed capacity of lignite power plants is taken out of production (currently total 20.9 gigawatts – updated 16 July 2014, BNetzA). The only way to ensure that lignite power plants are decommissioned is through appropriate legislation.

When the oldest lignite plants are taken out of service the gross reduction potential for carbon dioxide will be around 76 million tonnes per year from the end of 2016, around 81 million tonnes from 2018, and around 88 million tonnes from 2020. A lifetime of 35 years has special significance, as it means that only plants that have already been written off will be taken out of operation, and because this measure makes the biggest contribution to reducing climate-harming emissions while maintaining a secure supply. We can assume that there will be substitution effects – i.e. that the loss of electricity generated from lignite (unless it leads to a reduction in exports) will be replaced by production at anthracite- and natural gas-fired plants – so it is important to aim for the highest possible gross reduction potential.

This phase-out plan covers seven power station sites: four in North Rhine-Westphalia (Niederaußem, Neurath, Frimmersdorf and Weisweiler), two in Lusatia (Jänschwalde in Brandenburg, Boxberg in Saxony) and the final site in Helmstedt district (Buschhaus). Three of the sites (Buschhaus, Weisweiler and Frimmersdorf) must be completely shut down by 2020.

The closure of old plants will require intervention in asset ownership. There are likely to be fewer constitutional problems for older plants. Intervention can be justified by higher values, such as protection of the climate, environment, nature and health. Since lignite power stations are generally written off after 20 years there will be no significant losses for owners if plants are closed after 35 years. Losses will be limited to profits from old, written-off plants, the emissions from which generate extensive damage costs that are not incurred by the owners, but by the general public.

Even after taking the phasing out of nuclear energy into account, the oldest lignite plants can be shut down by 2020 without posing a threat to the security of supply. The existing overcapacity of fossil fuel power plants must be phased out. The key question is not whether power plants will be decommissioned, but which ones.

The proposed measures are intended to meet two objectives in particular: first to start the orderly phasing out of excess fossil capacity and thus fulfil climate policy objectives, and second, to begin the necessary restructuring of power station to meet the needs of the energy transition.

The lignite plants are also located in regions where there is already sufficient production capacity. Removing these plants can therefore also help to relieve grid problems that arise due to the “unfavourable distribution of conventional supply”. The need for reserve generation capacity over the next few years is not due to a shortage of installed power station capacity, but primarily delays in grid expansion.

To reliably eliminate any threat to security of supply due to decommissioning 24 lignite plants, legislation should be extended to make security of supply provisions for the Federal Network Agency, Bundesnetzagentur. In the event of supply difficulties the phasing out of individual lignite plants could be postponed.

The phasing out of base load plants only has a limited impact on the price of electricity. According to estimates by Öko-Institut, the decommissioning of just under half of the capacity of German lignite-fired power stations by 2020 will only lead to a moderate price increase of one euro cent per kWh. The rise in electricity price due to increased carbon pricing is considerably higher.

According to estimates by the German environmental authority, Umweltbundesamt UBA, the total environmental costs of generating electricity from lignite are 10.75 euro cents2010/kWhel. In 2010, environmental costs totalled €40.7 billion, according to UBA. Reducing power station capacity for lignite-fired power generation offers significant potential cost savings for the national budget, which must be taken into account when considering any future increases for electricity.

The decommissioning of coal-fired power generation in the medium term must start now.

To achieve the Federal Government’s climate and energy transition targets, lignite power stations will need to be closed down in stages, before they reach 35 years in service. It will also be necessary to progressively phase out anthracite-fired plants. Once a decision has been taken to phase out the oldest lignite plants the next step should be to phase out energy production from coal within the foreseeable future in order to secure climate and energy policy objectives in the longer term. In the view of BUND, the phasing out of climate-damaging coal-fired electricity production by 2030 is possible if the political will exists.

As with the phasing out of nuclear power, BUND proposes the appointment of a commission which, like the Ethics Commission for a Safe Energy Supply (Ethikkommission für eine sichere Energieversorgung) in 2011, could promote social consensus on the phasing out of coal, as well as a debate on the technical, ethical, economic and social policy aspects of the phasing out of lignite- and anthracite-fired power stations in Germany.
The sooner a fundamental policy decision is taken to phase out coal-fired power generation in the medium term, the better. This will ensure a clear future for everyone concerned and allow brown coal to be phased out in good time, taking into account social requirements. The task of implementing a structural shift away from lignite should have been initiated long ago and is a priority for the whole of Germany. Now is the time to translate it into a consistent reality.

Reinhold Pape
Source: Bund für Umwelt und Naturschutz Deutschland e.V. (BUND) – The Federation for Environment and Nature Conservation Germany (FOE Germany)
(BUND is one of the largest environmental organisations in Germany, with hundreds of local groups throughout Germany and over 530,000 members)